Keith Chen: Could your language affect your ability to save money?

Translator: Timothy Covell
Reviewer: Morton Bast The global economic financial crisis has reignited public interest in something that’s actually one of the oldest questions in economics, dating back to at least before Adam Smith. And that is, why is it that countries with seemingly similar economies and institutions can display radically different savings behavior? Now, many brilliant economists have spent their entire lives working on this question, and as a field we’ve made a tremendous amount of headway and we understand a lot about this. What I’m here to talk with you about today is an intriguing new hypothesis and some surprisingly powerful new findings that I’ve been working on about the link between the structure of the language you speak and how you find yourself with the propensity to save. Let me tell you a little bit about savings rates, a little bit about language, and then I’ll draw that connection. Let’s start by thinking about the member countries of the OECD, or the Organization of Economic Cooperation and Development. OECD countries, by and large, you should think about these as the richest, most industrialized countries in the world. And by joining the OECD, they were affirming a common commitment to democracy, open markets and free trade. Despite all of these similarities, we see huge differences in savings behavior. So all the way over on the left of this graph, what you see is many OECD countries saving over a quarter of their GDP every year, and some OECD countries saving over a third of their GDP per year. Holding down the right flank of the OECD, all the way on the other side, is Greece. And what you can see is that over the last 25 years, Greece has barely managed to save more than 10 percent of their GDP. It should be noted, of course, that the United States and the U.K. are the next in line. Now that we see these huge differences in savings rates, how is it possible that language might have something to do with these differences? Let me tell you a little bit about how languages fundamentally differ. Linguists and cognitive scientists have been exploring this question for many years now. And then I’ll draw the connection between these two behaviors. Many of you have probably already noticed that I’m Chinese. I grew up in the Midwest of the United States. And something I realized quite early on was that the Chinese language forced me to speak about and — in fact, more fundamentally than that — ever so slightly forced me to think about family in very different ways. Now, how might that be? Let me give you an example. Suppose I were talking with you and I was introducing you to my uncle. You understood exactly what I just said in English. If we were speaking Mandarin Chinese with each other, though, I wouldn’t have that luxury. I wouldn’t have been able to convey so little information. What my language would have forced me to do, instead of just telling you, “This is my uncle,” is to tell you a tremendous amount of additional information. My language would force me to tell you whether or not this was an uncle on my mother’s side or my father’s side, whether this was an uncle by marriage or by birth, and if this man was my father’s brother, whether he was older than or younger than my father. All of this information is obligatory. Chinese doesn’t let me ignore it. And in fact, if I want to speak correctly, Chinese forces me to constantly think about it. Now, that fascinated me endlessly as a child, but what fascinates me even more today as an economist is that some of these same differences carry through to how languages speak about time. So for example, if I’m speaking in English, I have to speak grammatically differently if I’m talking about past rain, “It rained yesterday,” current rain, “It is raining now,” or future rain, “It will rain tomorrow.” Notice that English requires a lot more information with respect to the timing of events. Why? Because I have to consider that and I have to modify what I’m saying to say, “It will rain,” or “It’s going to rain.” It’s simply not permissible in English to say, “It rain tomorrow.” In contrast to that, that’s almost exactly what you would say in Chinese. A Chinese speaker can basically say something that sounds very strange to an English speaker’s ears. They can say, “Yesterday it rain,” “Now it rain,” “Tomorrow it rain.” In some deep sense, Chinese doesn’t divide up the time spectrum in the same way that English forces us to constantly do in order to speak correctly. Is this difference in languages only between very, very distantly related languages, like English and Chinese? Actually, no. So many of you know, in this room, that English is a Germanic language. What you may not have realized is that English is actually an outlier. It is the only Germanic language that requires this. For example, most other Germanic language speakers feel completely comfortable talking about rain tomorrow by saying, “Morgen regnet es,” quite literally to an English ear, “It rain tomorrow.” This led me, as a behavioral economist, to an intriguing hypothesis. Could how you speak about time, could how your language forces you to think about time, affect your propensity to behave across time? You speak English, a futured language. And what that means is that every time you discuss the future, or any kind of a future event, grammatically you’re forced to cleave that from the present and treat it as if it’s something viscerally different. Now suppose that that visceral difference makes you subtly dissociate the future from the present every time you speak. If that’s true and it makes the future feel like something more distant and more different from the present, that’s going to make it harder to save. If, on the other hand, you speak a futureless language, the present and the future, you speak about them identically. If that subtly nudges you to feel about them identically, that’s going to make it easier to save. Now this is a fanciful theory. I’m a professor, I get paid to have fanciful theories. But how would you actually go about testing such a theory? Well, what I did with that was to access the linguistics literature. And interestingly enough, there are pockets of futureless language speakers situated all over the world. This is a pocket of futureless language speakers in Northern Europe. Interestingly enough, when you start to crank the data, these pockets of futureless language speakers all around the world turn out to be, by and large, some of the world’s best savers. Just to give you a hint of that, let’s look back at that OECD graph that we were talking about. What you see is that these bars are systematically taller and systematically shifted to the left compared to these bars which are the members of the OECD that speak futured languages. What is the average difference here? Five percentage points of your GDP saved per year. Over 25 years that has huge long-run effects on the wealth of your nation. Now while these findings are suggestive, countries can be different in so many different ways that it’s very, very difficult sometimes to account for all of these possible differences. What I’m going to show you, though, is something that I’ve been engaging in for a year, which is trying to gather all of the largest datasets that we have access to as economists, and I’m going to try and strip away all of those possible differences, hoping to get this relationship to break. And just in summary, no matter how far I push this, I can’t get it to break. Let me show you how far you can do that. One way to imagine that is I gather large datasets from around the world. So for example, there is the Survey of Health, [Aging] and Retirement in Europe. From this dataset you actually learn that retired European families are extremely patient with survey takers. (Laughter) So imagine that you’re a retired household in Belgium and someone comes to your front door. “Excuse me, would you mind if I peruse your stock portfolio? Do you happen to know how much your house is worth? Do you mind telling me? Would you happen to have a hallway that’s more than 10 meters long? If you do, would you mind if I timed how long it took you to walk down that hallway? Would you mind squeezing as hard as you can, in your dominant hand, this device so I can measure your grip strength? How about blowing into this tube so I can measure your lung capacity?” The survey takes over a day. (Laughter) Combine that with a Demographic and Health Survey collected by USAID in developing countries in Africa, for example, which that survey actually can go so far as to directly measure the HIV status of families living in, for example, rural Nigeria. Combine that with a world value survey, which measures the political opinions and, fortunately for me, the savings behaviors of millions of families in hundreds of countries around the world. Take all of that data, combine it, and this map is what you get. What you find is nine countries around the world that have significant native populations which speak both futureless and futured languages. And what I’m going to do is form statistical matched pairs between families that are nearly identical on every dimension that I can measure, and then I’m going to explore whether or not the link between language and savings holds even after controlling for all of these levels. What are the characteristics we can control for? Well I’m going to match families on country of birth and residence, the demographics — what sex, their age — their income level within their own country, their educational achievement, a lot about their family structure. It turns out there are six different ways to be married in Europe. And most granularly, I break them down by religion where there are 72 categories of religions in the world — so an extreme level of granularity. There are 1.4 billion different ways that a family can find itself. Now effectively everything I’m going to tell you from now on is only comparing these basically nearly identical families. It’s getting as close as possible to the thought experiment of finding two families both of whom live in Brussels who are identical on every single one of these dimensions, but one of whom speaks Flemish and one of whom speaks French; or two families that live in a rural district in Nigeria, one of whom speaks Hausa and one of whom speaks Igbo. Now even after all of this granular level of control, do futureless language speakers seem to save more? Yes, futureless language speakers, even after this level of control, are 30 percent more likely to report having saved in any given year. Does this have cumulative effects? Yes, by the time they retire, futureless language speakers, holding constant their income, are going to retire with 25 percent more in savings. Can we push this data even further? Yes, because I just told you, we actually collect a lot of health data as economists. Now how can we think about health behaviors to think about savings? Well, think about smoking, for example. Smoking is in some deep sense negative savings. If savings is current pain in exchange for future pleasure, smoking is just the opposite. It’s current pleasure in exchange for future pain. What we should expect then is the opposite effect. And that’s exactly what we find. Futureless language speakers are 20 to 24 percent less likely to be smoking at any given point in time compared to identical families, and they’re going to be 13 to 17 percent less likely to be obese by the time they retire, and they’re going to report being 21 percent more likely to have used a condom in their last sexual encounter. I could go on and on with the list of differences that you can find. It’s almost impossible not to find a savings behavior for which this strong effect isn’t present. My linguistics and economics colleagues at Yale and I are just starting to do this work and really explore and understand the ways that these subtle nudges cause us to think more or less about the future every single time we speak. Ultimately, the goal, once we understand how these subtle effects can change our decision making, we want to be able to provide people tools so that they can consciously make themselves better savers and more conscious investors in their own future. Thank you very much. (Applause)

100 Comments

What this guy did is like: "We found statistically that Rheumatism is more common in USA and UK than in Canada, and it was rare in france. This is a strong evidence that English language is the reason". Dah!

Although an interesting concept, the problem here is that he looks at the correlation, not the causation. His charts show that they correlate and relate in some way, shape, or form, but that doesn't necessarily mean anything. An example I can give of this is a study done about the relation between eating ice cream and drowning. Just because they correlate doesn't mean that eating ice cream actually caused drowning, it simply means they had a commonality (most likely, that it was summer).

ALL these languages are WRONG: Denmark, Sweden, Norway, Iceland, Findland, Germany, Austria, Switzerland, Netherlands, Belgium, France, Luxemburg and Estonia.
This Leaves only Japan, in which I don't know.
However good idea about how language affects thinking, because it highly does.

I'm learning Swedish and I'm not even good at it but it's not correct what he says about Scandinavia not having future tenses, I don't know about other Germanic languages. Hey, he's the academic and the professor but on surface this seems like skewing to fit a pre-formed theory.

How could he ignore India in this survey ? We are world's largest democracy with saving ratio of almost 23-28%. Though India is a multilingual country, we majorly speak Hindi and English, both of which has future tense and our saving ratio is surely comparable to other non-futuristic country.

You are asking the wrong question. Language is fundamentally part of culture, as are beliefs about the future, and he is accounting for this. He is trying to make the argument that culture is a factor, and that language is the vector that transmits these cultural attitudes. There is no contradiction in his thinking.

Many Indians also believe in reincarnation. If you have that belief, your whole wold view in regards to time must alter. That may account for India not being discussed. Or perhaps India doesn't have records that are detailed enough for his needs.

In many ways, a culture is reflected in its language. When a culture evolves or progresses, you can usually observe changes in the language to match that change. He didn't explicitly say it, but I think that ties into his message – language reflects a "culture" of the mind.

Is it just me, or is his future / futureless graph a bit of sleight of hand. Afterall, numbers 2 and 3 on his chart are South Korea and the Russian federation – futured languages – and Iceland is near the bottom, so saying futured languages are less likely to save money. It seems more likely that his data set is affected by the outliers of UK / US / Greece on one hand and Luxembourg on the other.

comon people, he only got 12 minutes to explain a complicated theory. if you want more details, read his actual report. The first result of a google search for "linguistics effects on savings" is his paper.

This is what you get when you have non-linguists talking about language… Just because we in Spanish or English don’t mark evidentiality in the verb (that is whether you know something firsthand or not like Turkish does sometimes), doesn’t mean we cannot understand the concept of hearsay or use it in court. He is assuming that marking on the verb is the only way to convey temporal concepts, but it isn't. We use adverbs and other means as well.

my opinion about your question is that look at luxemburg and japan. they have distinct cultures yet they both are one of the best countries in saving. I think your question is inteligent and demands research about it. But it doesnt mean language doesnot have effects on the issue. He is actually considering your question, and his research focuses on a population that has the minimun cultural influence possibel.

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There IS a future, but it seems more 'presently/close/near' to the futureless speaker. In this same line of tought, I make the hypothesis that speakers of a futureless language are less likely to procrastinate.

If you were going to buy the product anyway, when you use the coupon, you save money (that you would have spent). But it is a semantics issue, save can mean either put aside and not spend until x-time, or it can mean to spend less than usual on something. If you went across a toll bridge that charges $5, and the toll taker said," you're the millionth car, go free," then you saved $5 (even if you then spent that bill you were about to hand over.)

It's not that they don't imagine the future, it's that they don't distances themselves away from the future by changing the way they use language to explain it. All those people, I hope, are aware that there is future beyond the present they live. It's the effect that language has in making your appraisals of situations. When they explain a future event, it is more closely associated with their present selves through language. That's what I got from his explanation which was very well done.

So ?? Why do you save, you save for unseen, uncertain future. If you can't distance yourself from future (through imagination, that comes in thought, for which language is integral because you think in language), its all Present, present is known to us, we can control it better. I don't know about you, but I save to secure the future (So If I can't see my future as uncertain, there's no need to save) and yes the talk was well done, after all he's academician its his business to connect the dot.

his study only established a correlation between higher saving rate and the furtureless language. however, it doesn't really tell which one is the cause and which one is the result. I could also argue that the saving habit fostered a futureless language.

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Then I guess you are just a very remarkable human being; Dr. Chen, on the other hand, is talking about humans as a whole. Unless you consider yourself a representative human being, I would prefer to see some hard data proving your point.

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@ comments calling out existence of future tenses in, for example, German vs lower savings rates etc. I think a distinction getting lost here is the possibiliy of expressing via future tense vs the requirement of it. This paragraph from the original research paper says it well:

"In this way, English forces its speakers to habitually divide time between the present and futurein a way that Mandarin (which has no tenses) does not. Of course, this does not mean thatMandarin speakers are unable (or even less able) to understand the diﬀerence between the presentand future, only that they are not required to attend to it every time they speak. This diﬀerence,in the obligatory marking of future events is a central characteristic of the weak vs strong FTRclassiﬁcation (Thieroﬀ 2000), and is the diﬀerence between languages I exploit in my study ofsavings behaviors."

It's an interesting thesis overall, for sure. But is the effect due to forced cognitive muddiness or ambiguity about cause and effect (in effect allowing your thought processes to create rationalizations, or hiding place, for sub-optimal behavior, or is it due to a simpler effect stemming from reduced cognitive load (more brain available to make good decisions), or is it due to what I can only figure out how to express as linguistic crassness and lack of subtlety allowing more of a focus on money and success? Imagine the stereotype of the immigrant asian tiger-mom berating her second generation slacker kids: "You no study hard no get good job, no get wife!", as if because there is a narrower channel for expressiveness you need to deliver the concepts bluntly, in a way that the kids can't mistake?

This is one of the most interesting things I've ever seen. I always knew there were faults with the English language! What's great about the theory he discusses is that it's so beautifully simple – a subtle difference in the way different languages talk about the future actually makes a difference in the speakers' inclinations to save. Fantastic video.

Not sure about all this. In his simple chart showing saving rate of different countries there is little correlation between language and rate. It's a fairly mixed bag. There are also too many variable to control.

I could easily take Luxembourg (GDP per capita of US$107,000) with Greece (GDP per capita of $21,000) and see that Luxembourg is a far richer country than Greece and could save more.

Keep in mind that Luxembourg speak both French and German as well which are to the right of the graph.

Looks like pattern seeking bias to me. I speak both English and Chinese. In my case, I believe that I am more influenced by the Chinese culture to save than the language itself. There are many other possible unknown or deliberately ignored variables that may explain this variance.

Chen is right about common German language usage regarding the future, i.e. that German speakers mostly use the same tense for present and future. However, it's important to note that this is colloquial and strictly speaking not correct because there is also a future tense like in English: "Morgen wird es regnen". If you used his example in a German exam or other written language, it would be incorrect. It's the equivalent of saying "It's raining tomorrow" instead of "It will …" or "we're leaving tomorrow" instead of "we're going to …".

perfect illustration of whorf theory which is proven wrong long time ago…i dont think there is a futureless language. if you notice, tense in those "futurless" languages are conveyed thru indicators like "tomorrow" "right away" "yesterday" I am Chinese, and even in descriptive grammar we dont just say "it rain" because it causes ambiguity. the very fundamental question we can ask from this video is that "does language change our behavior?" and i personally think the answer is no. Language reflects distinctions people make about the world, it does not cause them to behave differently.

?? that graph to me does not look like its "shifted to the left" for languages with a future. No infact it looks to me as if were exactly what you would wexpect to see if there were no correlation at all…

Language shapes the mindset of the speaker is a Topic that has constantly being proved right in recent years, as we can get more statistic from all around the world and analysis it. It doesn't prove one language is superior to another, but to make us realize that it is the way we cognize the world. In this talk, it just happened to be the case where English shows its disadvantage. It is really sad to look at those comments who intend to keep their ego and try to convince themselves that it is the research doing wrong instead of admitting that this research could be the fact. They showed you a simplified chart to help you to get rid of the complexity (for example the Luxembourg case) and they seize that point to prove this is a loose study. OH my god, when the researcher doing this research worldwide and collect data from thousands of languages. How can they do not know Luxembourg speaks both French and Deutsch? They must have done the distinguish.